CF - Earnings call transcript Q3 2017 | CF Industries Holdings, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2017 CF Industries Holdings Earnings Conference Call. My name is Vin. I will be your coordinator for today. I would now like to turn the presentation over to the host for today, Mr. Martin Jarosick, with CF Investor Relations. proceed. please Sir,

Martin A. Jarosick

CEO; thanks and On earnings XXXX Distribution. this and Relations results CF in about the of Industries' find session. information President host of Will, call and measures the available reported factors CF posted presentation SEC CF. in Frost, CFO; our Industries Good this press Vice website. Chain; in Senior predict. actual and website are Vice on statements. Nitrogen involve is may call. you for statements are are and I'm quarter President facts performance our in from performance materially historical Tony may the affect are that detailed guarantees CF conference me Company, GAAP we'll be filings found and a assumptions expressed which results More statements. on Also, release on Manufacturing Terra Market and call, our and website. are risks, with President-Investor Kelleher, These or reconciliations what any not our L.P. Therefore, afternoon, review and Martin third Industries' are our yesterday detail, between third implied of outcomes to future and With Bert forward-looking outlook, Senior in Development as discuss not may differ uncertainties will the question-and-answer morning, our Sales, that presentation the did quarter and today joining made Dennis Supply its results Statements our Jarosick, for Bohn, Vice Chris then that non-GAAP on our difficult

CEO, introduce our President let Will. Tony me Now, and

W. Anthony Will

results generated for below pleased detailed I everyone. account posted considering especially XXXX levels. EBITDA and Last items adjusted began into for the in our and the of in the we night, which with Martin, results release. am our we Thanks, meaningfully million, particularly how quarter quarter prices the taking $XXX of quarter, third after XXXX, financial performance good our morning, earnings with

unsustainable our the improving shipments summer, As prices responded and rose well, from the ramping nitrogen extremely lows up capturing the prices. dramatically of team

Our team tons plants safely. produced Operationally, most gross it demonstrated ammonia, business. really of our We ran parts again. importantly, across X.X we the well once execution of impressive all million but did

Our XX-month XXX,XXX work down per X.XX incident recordable rate was hours. incidents to

Our across of tremendous more team a level than without million lost-time the achievement achieved also X our hours activity a injury. This considering system. has is

sales volume the This Our historically quarterly North third us applications because a in second the due seasonality is volume is ever. was the of particularly volume America. quarter impressive, lower highest quarter for to

with we program. in UAN in-region our This summer the demand, enthusiasm fill participated as first, rose. at increased During North sparingly successful quarter, American the included but prices

than to ability before American Donaldsonville's leveraged as greater a also We global North parity. prices nitrogen extent ever to export remained below

quarter, X manage is at netbacks products our to increased by million exported These When inventory which and customers comparable exports new America. purchase selling North export from built allowed balance were quarter. margins. back third the inventory CF unwilling prices, American record overall system During international maximize we any in to North a for to and we to sales positions us product tons, pulling

chose on very we more recover, were volume. pricing to able strong and began prices to better As capture to sell actively

and cash and maximizing elements inventory Our export are to to generation are capability combined distribution with CF, in this business. critical network unique our extensive

international to have trade export below We even parity. North ability volumes should grow America to also continue additional further

reduced global global and in to curtailed When this of a and was prices India, variety strengthened As in supply global nitrogen in I have the well, regions. mentioned, adjusted also by producers during global demand quarter regions especially North rapidly production, of from rose the significantly the during but flows remained lows unplanned pricing supply America Brazil and July, international and in prices rose. planned trade unsustainable below was and Prices outages parity, limited discount. increased quarter, product as in high-cost

imported this quarter, North arrived the in less America the the During in first period or half year product XXXX. than third far in same of

of whole. in up new fact, we and In this net global could symptoms the where of price market end transition the exporter trade and of in a importers quarter set capacity flows by spring in was America yet not North capacity of neutral complete. nitrogen take as we not up fluctuations and additions America, lows for XXXX This North up in third the in ramp into full expect this we the are experienced saw on transition, fully retesting capacity have as urea account, ramps approximately net the July, imports-exports significant adjust, we particularly to is pricing final rates to a a summer XXXX. and Should The is true mid-XXXX. additional

global our the get expect we growth quarter from benefit the to demonstrates capacity a growth company after stage best this set price demand positioned nitrogen CF performance new We to we continue recovery. exceed how XXXX, believe through sustained and recovery. However, for the to more is

Our North flexibility, records storage, optionality low cash seasonally in America. of maximize operational in a advantages, demand allow export scale, volume us production and significant to period in-region and absolute margins set

gas, nitrogen North structural the to and North operating Our established American natural well region, advantages, are enduring. import-dependent the and American growth in low-cost demand long-term access for

commercial price about we the let will believe disproportionately from who we our discuss talk offer some Taken Dennis view. turn the results our environment over quarter that, With Bert? forward Then, us. will remarks. closing the me together, ahead financial during Bert, environment I CF of before call to and improving more see the benefit will

Bert A. Frost

shifted performance Tony. in assets, needed, team employed carefully when product agility and where logistics to of selected and CF's mix the strength and and Thanks, quarter our third our the We our demonstrated the system. and sell. opportunities of when storage

are cash going ton. well XXXX. a overall trading urea into to $XXX to NOLA maximized We record available us, margin positioned while believe very to we spring began close result, with The $XXX the short a approximately per achieving were As for levels we at quarter decade, low expectation shipments. would lowest in producers we're below with similar quarter and at or seen price production through that XXXX, remain the many Prices the at July close These world. pricing around the costs the full excluding levels.

a in However, lift and helped of in low through production increases then world, Chinese with areas level prices combined and the higher and the continued production to exports, August and cost U.S. of energy move dollar, various September. weaker

in than to the As we urea and continue globe show inventories expected by supported India exited Brazil. demand the around low prices strength and quarter, higher

rest of terms demand and the the lagged America the of throughout North in world However, pricing quarter.

achieved solid for While early upward as improve shipments. exported UAN UAN. XXX,XXX quarter, export UAN and the the for and sharp quarter and was in to international ammonia various netbacks three for almost record results We the of exports to and tons volumes X.X team to domestic of netback values. third very exceeded These products urea ship tons at ammonia book a destinations that and second and pivot the build volumes to of prices our The tons a ways. not increase favorable in level available able increased and CF ammonia allowed CF trajectory, from urea, load us XXX,XXX million again for shipments allowed and record Late dramatically. followed available urea. did the

launch delayed fill June of we could and First, program, UAN higher July capture the prices we our so applications. for

quarter. urea not with And participate initially and sales Second, third, patient to higher ammonia offered, we able low for fall did extremely we in values capture were in applications. the the prices by later some, were

taking Mosaic shipments either in ammonia export which at contract to was the or destinations. September available for favorable Donaldsonville Additionally, began price, early from prices domestic

for will supply expect decline agreement significantly of forward, have Mosaic. to ammonia Going with due the export the available amount we to

market as in Now, appear with let The changes of just-in-time some for keeping to trade provide online interpret through in new North participants global it America and averse Buyers more year. period global These inventories be selling remains purchasing and market broader flows our risk capacity or greater to lower adjust. back-to-back. thoughts volatility. remain comes in leads signals, outlook. and also They make harder purchasing a this me a manner the transition on to

to areas internationally significant inventory bearing case, with North challenges at list distribution utilizing we meet options right make work production All growing import attractive any American network. right also the our tons and and play mix. In adjusting sourced as will the continue our to longtime material as as often product our of time, to importers and customers strength times of storage of the and changes risk. involves to less They these deliver lead longer customers well these new

that, With are and global to our call to Dennis. do the ability transition. the let continues to that, We nitrogen have me demonstrated well-positioned over market as turn just

Dennis P. Kelleher

per After taking per for $XXX company million. EBITDA adjusted in share $XXX quarter. EBITDA loss $X.XX diluted of into the the adjusted items our million reported was Thanks, $X.XX, detailed press Bert. release, quarter account loss third The a and and share third was for our diluted the of

our Our in net is have result on derivatives. adjustments system. in included a we head to natural plants. want cost highlight office This gain our our of to across targeted and gas $X achieved unrealized a million mark-to-market I costs reduce our efforts the reductions

XX% by business to demonstrating Our the last our of SG&A compared our same volume increased by without costs. flat about was incremental since significant last and incurring year head capacity period sales year, XX% scalability roughly the We model. office

you percentage we and generally despite SG&A as the XX. lowest have a fertilizer can significant in of fact, In as adding on see slide commodity among space chemicals the production, sales

maintenance per and cost by in since reduced sales. SG&A a our reduced on activity XXXX. have procurement practices better and ton services, At plant basis, lower professional resulting we ton manufacturing controllable payroll per decreased SG&A at Looking of a sites, product XX% cost, level

on compared a third As by more have sales we and ton you than on almost product $XX controllable basis. of $XX XXXX see slide quarter per year-to-date can cost reduced XX, to

Our sheet strong. balance remains

are these redeem bonds will quarter facility May reduce made we billion ago revolving December X, to our estimate XX, cash was cash million. fulfills undrawn. million. equivalents Monday, and XXXX Our cash action cash expense and that $XXX the the of expenditures cash as will announced September total be million. third credit for end interest We $XXX our – $XXX of were This of we the on that with $XX XXXX. of million annual approximately September $X and bonds we a as over by XXXX payment the redeem the Capital commitment year

expect new XXXX. year, million For to the spend for we approximately full $XXX activities in

and Additionally, $XXX related our our our On view vendors. but from second September to quarter activities XXXX. XX, that exceed the unpaid disputes we provided we amount prior-year's as was Most contractors earnings EBITDA. unpaid million it quarter adjusted of accrued, capacity and concerning would in that unlikely remained originated this expansion XXXX, and based that certain than our would of particularly of that costs approximately the with point, more thoughts third call, is lower low. higher benefits costs environment, as prices, product August volume for Bert by volumes view to offset pricing the Compared and urea fairly improved by July's the higher the and September driven poor somewhat gas was lower dramatically described. sales on and were prices, controllable be starting in This

took our of of advantage more approximately to ship offshore than team rising demand expected. XXX,XXX we prices tons sell and Additionally, product and

we We cost expected. than also achieved reductions greater

the regarding a result, substantially quarter thoughts to this for expectations now will time in our call. is quarter came conditions. I expectations changes at EBITDA our the subject understanding the some second of in provide market the too for quarter of specific XXXX, that As adjusted fourth our above

see to expect of higher fourth quarter the We costs lower compared ton controllable per XXXX. volumes and to

to also MMBtu for flat higher gas We the all cost period nitrogen per and compared products be year. expect same to prices last across essentially

point However, I'd to things few mentioning. worth out like a

to achieved First, have of quarterly fourth predict, would that in may are terms otherwise X-month It quarter timeframes. pulled the we the volumes robust forward or we volumes better some volumes and to XX-month that in it sales the believe quarter. of we turn in out sold is difficult think third

up materialized. sensitive for price volume to quarter. priced the was before fully in And the had remains during in Corn Second, time. Belt. A a very price much the of sold risk fourth condition of is growers' just ammonia narrow quarter a amount beginning window decision lastly, went to ammonia is volume some Therefore, the season weather we in ammonia and October significant the of the of fall third in apply

of EBITDA based of factors view some we adjusted XXXX is fourth of we our call fourth all today, will remarks open financial results Q&A. So, With provide to million $XXX that believe likely the it the on of will exceed quarter reported XXXX. in for our quarter these Tony the of that, before closing

W. Anthony Will

Dennis. Thanks,

Before things. questions, want couple to highlight I a we the to open call of

business Slide second the the has the to net Even our we and more grown by voluntary our during contribution the along our program, cash This how over first on industry distributions a $XX has in even XX refund than quarters federal in through our increased including resiliency, First, seen interests. one-time means CapEx, we even non-controlling three covered year. received cash period by generated shows during challenging this we've sheet dividends, difficult the has demonstrated to balance interest, most its environment quarter, the cash with fixed tax $XXX excluding a charges, decade. we million. of the million pension

fixed by mentioned, further the million Dennis repayment $XX interest of charges portion we will With the reduce year. per bond

want has to team's our XX, the achievements At to been our conference August compare the XX four item targets over laid XXXX months. on The commitments we time, for slide execution business. discussed today we second out highlight On call. last we I made the the that

First, XXXX. of start end complete up by the expansion projects and the

CapEx annual $XXX reduce to million in Second, less XXXX. than

controllable due the on fourth, balance sheet $XXX repaying million May by our leverage XXXX. reduce expenses. of debt reduce Third, And in

team's Our all the projects end expansion than yielded running nameplate all results four above capacity. the targets. excellent and XX% We have XXXX, by new of reliably on are units more completed efforts

million. XXXX be New is to in approximately CapEx expected $XXX

year-to-date. ton ton approximately per have per We by expenses XX% XX% reduced SG&A and controllable by

that this announced redeem week, we earlier we leverage. early, our the reducing bonds will XXXX Finally,

excellent Importantly, all we this with of performance. safety achieved

accomplishment. the of maintenance, now we shipping activity that, and Given this With over call will heightened and level along questions. outstanding operator, normal the open is with production turnarounds period, an that for

Operator

you. Thank

to the ask yourself others As a one limit that we question. courtesy call, you to on

will queue, as If ask we the that questions, you additional we answer additional allows. have you questions time re-enter

first Sachs. is Our of question Goldman from Adam Samuelson

open. is line Your

Adam Samuelson

morning, Yes. Good everyone. Thanks.

W. Anthony Will

Good morning.

Adam Samuelson

just and and over some really traded quarter, the discount Maybe evolve as first, year, pricing Tony, the of has product the premiums, and for UAN a at U.S. to continued since world, trade has really third sustainable them the to market, rest thoughts the you've seen the this on the where at particular, a think that about gets you to which realizations your – how realizations talk for construct the how versus actually unusual. benchmarks quite urea, quarter? UAN premium those discount fairly are about against reversed, Can what kind that you own in think and with good to is of this evolve your summer

Bert A. Frost

as This to And remarkable. launching were evolved little end strange Adam. July the our are Thanks, a of we program is looking I discussing, this bit way, world internationally, point the and a Bert. $XXX, do think fill we've has in even The market purchases And right, and when period off is have a as that a discount of the at where North the $XXX urea. America, of a bit transitionary at positioning. frustrating to today a of up in as in July reflection that and at we that's mentioned you're at is. market where coming Sure. been that we trading we is market with little of we're UAN more. lows stop-and-go-type close $XXX, to And But

product And at conversations partners become in the we all deem so, working at move with customers markets around to world. that at adept we And all customer different the appropriate. times and accessing margins with our

in capacity in for probably of maintenance different you to are to world. so, that. capacity to North come taking seen the in around demand come idled up think product of we support we've what's this there's And with There America, late – But been robust pricing, we're QX. when QX, closed in and look that positive India world is parts just and will up situation in is And place current the attractive. the off that and priced, turnarounds forward still tender

months a of more a in corn crop planting activity, prepare March. have they still and as You few February second Brazilian for

geographic that And a North time as support the year while premium great with did will UAN program, are that still Relative to our job and base, amount imprint. a probably about starting place the we urea, working talk but spring. you're believe, into to UAN XXXX. traded team with But, has discount over America and to take point the, this customers, our And that as fill of right, historically customer we at planting arrive significant February see that at that transition to will imports may broadening is UAN a So, season in do take have return pleased. a anomaly. its a in then we very to status, early we there. very good The summer product of you believe imports our an

W. Anthony Will

Bert on want thousand UAN we've the we other And because just America, ubiquitously of is the in well. our of got only and at couple Neal, day, urea places. that hundred and just on, tons tons as more in on. we've added urea-limited a capacity a the that's plant were tons new with X,XXX new million Port UAN X capacity of in urea than terms over UAN, Donaldsonville in UAN at to a other much – million of of The brought thing kind Iowa with X Weaver over international so we I tons, a a operating brought markets, Argentina. has plant brought is and that on North of is makes We're add markets couple for there's used and a few principally less side, demand point traded. below But you've in a few it. which Brazil off beginning Europe

a million increase. a has And million, for to to you UAN just it's renormalize. at U.S. look the urea going huge That's I of little of kind premium pricing while X.X capacity. that, added percentage the before see think X tons you absorb the marketplace So, when that, take

Bert A. Frost

that that is Tony to dry benefit product about that agility about or We of produce balancing urea, the some or our utilizing talked different DEF, And of, mix product we tools. can liquid we're those as all configuration. talked, urea, and move

Operator

you. Thank

Carson next your open. Our line Susquehanna, is Don from is of question

Donald David Carson

view source saw Yes. some scramble UAN between ramp? the and extent as exports to market. going product saw just the Weaver NOLA strong we domestic forward? Belt premium fully what ammonia as weren't the comes in of premium your new maintain Bert, your think dealers on they was rise a what's Corn kind on a it QX I go and that of market? the price to And this mean, do you to question that we on Enid mean, down in capacity all urea, and I should with or by

Bert A. Frost

at cost So, and I'll premium. answer looking that moving today, premium matter move part positive direct the it from Galveston to product, is first, the it's There holding, a or if you're no to we're to NOLA Texas. to holding, is a the markets East because the cost. Nebraska, premium say, or hit there the to fully and Dakotas And again, Ohio from, that on intent West Coast we're consumption let's

Now, divisor spreads, on values had nutrient their in product terms in as ammonia of content. based a the of prices the has in lower historical, some terms absolute

also. think that's I an anomaly

producers move balance that this, needed to I into excess few think of had we the quarter, product. because probably prepared, the going and as weren't upgrades a ammonia the

themselves fewer we tons had customers, for as big and an anomaly you're in in as produced based think and as UAN But probably at we've will with right, market. fewer customers, at we've ammonia a fall well probably happen position imports corn. I fill. our small this So, future of what look seen several nice I applications than move But well is anticipated. did do the medium the on think the urea,

do to QX think needs there that for fulfilled be a I market ready to spring. So, be is going into

over and I purchasing, do those as to So, next, four let's think need some say, five logistically as will be the tons, there needs be months. well moving to

So, that's positive. constructively why we're

W. Anthony Will

or of Bert, couple to the tons Don, U.S. add the another import, a million going what, about need thoughts so. let which X is me still to that, just urea of is

Bert A. Frost

say X million. I'd

W. Anthony Will

X million tons.

if where premium you prices is there So, North get at significant The a Africa to have can't rise. trading we're trading. eventually at to NOLA

I'd last that ability we've up The Donaldsonville. quarter, is, export other this to demonstrated point make our

pay should that So, and because be to Midwest and to we're tons the in ways, better cost. those tons into cost plant, the the of transportation into considered not recover netback. move a those not move really marketplace international lot Donaldsonville tons an We going get could international just

why product D'Ville the one, about premium another when because And odd of other from we're the a short got bit Midwest Midwest is cost to question if stuff so, all our an not incur we options, chronically hold going whole whether perspective is up that's the reason and of that put there. the we've even

question to So, reason the to premium. Midwest no someone up the there's move has there. the We product why got see economic about pay a freight even

Donald David Carson

Thank you.

Operator

Thank you.

Our next question is of Credit from Christopher Suisse. Parkinson

Cool. line Your open. LLC Suisse (USA) S. is Credit Securities Parkinson - Christopher Thanks.

on and even you guys was or but in across based the Neal you In the get whether D'Ville focused mainly Port and costs, just fairly You a cetera, can comment Southern better and reducing you XXXX? was your do in have XXXX start et believe Thank ramps, can respective any Canada? much how Plains solid you. after done it words, other facilities broad up clearly this controllable job pretty costs,

Christopher D. Bohn

To put in Chris, this as Tony is the is and initiatives part last of mentioned, first third year question in Dennis second answer your place Chris the we quarter. that Bohn. these

we're of So some it. to beginning lapping see

So, since I volumes Neal we'll bring late last year. we some still benefit QX didn't see that would expect on till Port specifically from

volume be benefits we there'll some continue that see. to So,

Securities S. not that the those maintenance professional in Parkinson come is services, Thank based. so (USA) LLC more really that Suisse it's we've our As at expansion you're started expense. we on and facilities, to And What broad and being Credit and far directed engineering seen diligent just primarily activity this down much Christopher is, did at you. focus just two. we as I be the payroll spending, Great. think - our new assumption correct projects, across at focused all

W. Anthony Will

Chris, bit follow-on one other just a there. of

a got the a engineering capability lot that improvement capacity bit we've on and of we've bottlenecking focused at side. of So, on had the fair plants. Historically,

you the done the is to used where As more a high perhaps at as incremental Chris value be. great know, looked environment, has a job of difficult it Bohn ton redirecting we've of not market as that talent base which the our it so away side and on service maintenance through turnaround really professional that on then expense and further expenses from those CapEx improvement to activities, focus going reduces more begets activities.

say, been So that double a achieve there. it's, I'd benefit we've able to

Operator

Thank you.

Our of from is Joel next Jackson BMO Capital question Markets.

Your open. line is

Joel Jackson

you for Hi. question. my Thank taking

You ammonia talked are about sales little strong. a quite

obviously had of You've lot a capacity.

and I little give At generally for a pull-forward a on dynamic. think ammonia, about some was possibly ammonia? you update products QX some Maybe volume there for spoke in that some pull-forward least little Thanks. QX.

Bert A. Frost

some about absence ammonia was Mosaic in late, moving of for tons, it we we sales Damian The XXX,XXX talk contract to vessel do the of leveraging, capability one talked did pivot where in the export great QX, was which job we had No, things, a destination had and whole with we on, working of wasn't. and this so different sales. – as markets about those those planned of their and

Oklahoma, And applications have of for in do is some ammonia area. majority Texas, so, in QX, we of sales weed that Ag Kansas and

and And Ag will end run because have through, the of so pretty late corn difficult, QX October already December. sales is by forward hopefully pulling in started application

great the looking the a territory normal and still in are Iowa. window for today like and not We're determined. in to weather Nebraska country, colder And rain the but maps, the so, sunny in out And to northern it's season, be clouds. following and ammonia Dakota's, we up we're although we're corn Chicago in application anticipating

we're for the XX strong anticipating days. and off be So, season kick to ammonia the next

Joel Jackson

you. Thank

Operator

Thank you.

of Our Steve of next Byrne question is America. Bank from

line open. Your is

Ben Gottesdiener

compares levels Ben morning, how grain-growing and India, you of estimates Brazil, in levels? inventory of Can nitrogen on U.S., the historical the that major is Gottesdiener for everyone. Good of regions Hi. your This discuss world, to channel Steve.

Bert A. Frost

XXXX. the X at market represented through That of looking What excess import inventory you're was limited was million India. India, in performance When we to April, drawdown then a based a more tons pushed And had X.X just of projected September very today from a beginning December, Sure. of the way believe we from tenders, XXXX's the into volume. and an India. on of million all to consumption or tenders absence inventory of September in a seeing that month significant you're in probably and happened tender tons additional there

Brazil think tons we and up by for to inventory, that probably it's they about the January, the into tender and India, even low positive So, represented in that continue a will X is over statistics, to-date. is million continued in time. exceed early to Imports this for it's urea April, million tons and Difficulty store year. to March in started X forward Brazil and market.

level And second had we quarter see lot out NOLA. and, for we that at we of a don't pricing market, believe FOB low all thought then inventory appropriate of looking $XXX a entering pull around very in June but July, Brazil in program hence, fill February. our them past was for products on positive we're carrying UAN So, our positive inventory coming

an of we're probably limited And against that, amount production as we've reported publications to shipping so, some by had incredible come supposed the but in and that of exports, newer were some plants the online. of

level expect average average would I urea. for to is below UAN an at and that So, inventory

For is inventory the that ammonia, fall, and producers, a robust that prepared mostly adequate and we're happen. stays for should our with

Operator

you. Thank

Juvekar Citi. P.J. is question next from Our of

is open. line Your

P.J. Juvekar

up before even have in prices winter. gone Coal the you. Thank China Yes.

there? start capacity in If you about China stay let's shut on that outlook urea your then what's China, secondly up? do $XXX, say, prices back has down how So, China anthracite much capacity. And significant of amount think of can

W. Anthony Will

Chinese pretty constructive we're P.J., that's coal, to So, where headed. on relative

of of folks going our CEO is the on prices Chinese that very, added coordinate intel to John who's We Arch carefully. forward. board watch constructive our that very and the very we've we Coal. bit a Chairman recently obviously coal – remain They them, One of Eaves, with

what there of focused prices administration don't on environmental the on regardless We those where it's believe other the a that set I urea issue plants and hit do is cost emissions current that meet are reform, the think requirements I the of just very energy won't in think of that Or, come is don't yes? anymore Dennis, matter front. a really back just international China. is, purely

Bert A. Frost

a to at XX you're our think XX, for competitiveness, production seeing That whatever or basis $XX increase X looking metric to are million are million coal we structural China, tons. probably in market tons. reflected has metric in just we tons the Exports, metric combined today than tons; capacity to – And million exportable tons that with around in leaves the price. of interior metric cost of on I the there believe, And the significant greater metric puts areas XX place the there low-production cost XX, million several a out, utilization, urea. publications destocking price XX, spring. around directly XX was domestic a India, put like million X took $XX is project, also industry

that And $XXX what prices I don't environmentally it need is any I challenged, I think $XXX little a And to market. back production. go know that's say the for to the agree them to with prices be I Tony production over that back brings would low. so, probably bringing

Dennis P. Kelleher

RMB thing of the see other are into our think add exchange that per we in about curve I sort that modeled X.XX there perspective, the rate Yeah, is an slides, we dollar. I as cost you would from

If to above sort people predicting this you time be X. year, to RMB were of well last go back

the And the as the that in right helped well. that, only Bert coal addition exchange so about, not moved direction, talks but environmental in rate prices stuff to

Operator

Thank Vincent Andrews from is you. next Stanley. question Morgan And our from

open. is Your line

Vincent Stephen Andrews

guys. Thanks,

a of couple you'd nimble still regardless those like are with? are going to relationships to more comparable export can you to where regions things. going or the volume, in just fully or you're you the in the need to forward, baked be, do U.S. On there in One, you're market that export various relationships, base the level be? secondly, build, going is terms partners sort the of you of be? program, or of whether to export how you trade think going you're then it's And there that a Are export maintain how to of looking netback, or to

Bert A. Frost

in added We've staff UK total going believe be think ammonium nitrate, company that's the on spreads product nitric the the added UL, Argentina, actively participating people down urea, as options that as move, and take there. and that markets of inventory, the grow staff. our as added are do as area, We've between the work don't and those relationships farming those operations that's in building long-term Uruguay, In when us, leveraging We've the over to the has think Germany, have active we sales last on we're that Brazil, look European international internationally. advantages and years, Based in the both to think several five the our we're yes, traders, for France, well doubled customers leveraging what optionality, DEF, to to us always destination is as think do, anything. purpose. of our we UAN, Chile, regions. matrix in to based at mix domestically And I for – long-term. nimble. domestic with I and whole I we as we Belgium, well and incredibly Colombia, customers for We've have Ince. well worked number acid, and available structural because also relationships And, you available Spain, and market, actively I want in ammonia, with, with

global look when the arbitrage if all the anytime it. or and board, at about in an so across and that but is know we And participate an advantage, a this time, you want there to participate say market, we we

optionality. a we it's specific allocation have netback by driven tonnage or so all don't market, and per And

W. Anthony Will

to But, Vincent, opportunity it's pretty export to keep point product get that Bert's north tons of to netback back – easy and if better I us those for on to tons than a home. optionality. $X the to year million us think it was were for I I mean, mean point

quarter. it's export I we're But be X.X going tons for order year make think other per room to and be million clear, going to in I closer not to want out, to in year probably to people. just

side money. lot up one going import hard. of of at a could trades, then own our wrong peril, this very losing people we're the get to assets of because into their on end product you run think And those marketplace I you

stay people that. cognizant So, we'd our to prefer tons of here, and need in be

Operator

you. Thank

RBC question next Our is Wong Markets. of Andrew Capital from

Your open. line is

Andrew Wong

for Thanks morning. Good Hi. having me the on call.

like I'm with of last wondering, more is maybe above curve, new how guidance? EBITDA and year's you see help help And pretty mean, could out you cost change? assuming I and higher on being you higher fourth input Thanks. that could But So, on much evolving just quarter cost. think prices don't just quantify on Because, do some to that? details the then help the clarify really magnitude understandable volumes see XXXX just if or maybe prices the I lower some the maybe or how provide you the

W. Anthony Will

more to in were third I'll the pricing thoughts kind respect up relative because, that the our has with end to up some the see go our tell material being. call might being, quarter what one our in quarter, around second ends didn't just don't water what evidenced as on change, we Andrew, we're we than So, thinking, expectations. providing dipping and of impact out you, We was of toe sort magnitude results a quarter of

about we to said in terms we want of where we've think I So, directionally say all expect to be.

that shape that XXXX, lot the it. and As XXXX, the things looks of an like of influencing absolute awful to what you get out XXXX, start there's magnitude of curve

is One exchange price of coal price, rate, in and earlier main so ones forth. indicated the as Europe Dennis gas

U.S. expansion. interest might U.S., for that All that again, terms XXXX. variables the dollars, or view deductibility to affect you curve. of But possibility our think strengthening reform best or that's treated So economic the tax there's particularly expectation input try and weakening cost in not, give drive is enough how as in and big a involved, rates, we exchange how of for things about to those

really haven't very feel say we continue costs, in the we cost would we gas But I to to XXXX. published and that operate curve, out feel we about believe good we're going of goes low So, and sit. deep where anything the natural we part good about to American North

Andrew Wong

Thanks. Okay. that. I of all appreciate

Operator

Thank you.

Michael is from next of Cleveland Piken Research. question Our

Your line is open.

Michael Leith Piken

Hi. Yeah.

Just cost wanted the more to here. touch bit a on little side

a in flavor for If XXXX, you on updates gas could us any helpful. natural hedges that'd just be Thanks. give

W. Anthony Will

are exited for On hedged gas as XX% hedged, based guidance, gas, we we that tied our for QX, we have XX%. were And XXXX. contracts we industrial as we've are additional are given previous

hedges And any not for or have XXXX of covered. forward. roughly XX% our QX or we added production So additional is

Operator

question Isaacson next from is Ben Our of Scotiabank.

is line open. Your

Oliver Rowe

Rowe for Oliver It's for taking on Thanks Ben. my question.

How couple like urea? mix the Over urea AN less relative products pretty to as and years, GrowHow other sales impact of and changes a such an drivers of performing move? had, see this being your we've and the mainly you lot or is past much due of well into seen of UAN. other than Do prices DEF elastic UAN to and AN

W. Anthony Will

former owner CF and the I couple be the XXX% mean, tremendous Fertilisers would Bert it's is which us say in, to a I a GrowHow the been of of for one then of things UK, jump UK. business, benefit

that when some discipline with agreement of So and to then Nelson it business. beginning provisions separately, perspective operational And of pricing the than an was brought the XXXX contained lot that historical. in, were of supply and Orica, long-term kind both attractive a that we've perspective marketing in Brothers at kicked from a more

the things a feel couple substantially combination very have looked us have and years we to made that segment. relative that those business the good of AN improve it about for ago, like it's pretty what two So, would really

Operator

you. Thank

Our next question is of Falcao HSBC. from Alexandre

line open. Your is

Alexandre Falcao

a been the on positive XXXX. Is guys Thank very seems two of we're probability going My of scenario guys it be on, just not And more and penetrating question think there wrong? painting is, strong have I wrong, you. forward? market a Thank One particular, if for ramp-up fully that is, you you going biggest very anything where market, do you Is still second see in specifically phase? goes to a questions. you. you've anything going there. are expect Brazil, could from to

Bert A. Frost

soft what could what into of and went XXXX strong dollar, wrong the energy All into actually, XXXX, commodity leading changed? low-priced, corn, coal. and flattening world; places most What's Europe low in energy low-priced I'd and say, XXXX a in low-valued in wheat, markets, those. sugar, curve; So, freights; wrong, already vessel go cheap cotton; XXXX, were a from

are we freights as the of end go So, into up. this year,

maybe weakening weaker a it's coal and down pricing positive dollar with $XX. to China RMB United flat in than from ship the $XX, approaching production could We have the Brazil stronger, good think positive one for still States but there. $X.XX looking agricultural You which ruble China, less at energy stronger, today little for Australia, over a $XX, is probably increases and A good. euro I market also are there. point a with those curve,

America up. why believe year maintenance wrong it's is, or talked And and offline in transition so with going what was go additional could demand coming up, forward. Capacity about, North we and we've patterns a in coming capacity that's still

as Relative and post-XXXX, we your talk there's we a new So, demand-driven a surpasses, that's than believe market, Brazil, think on growth, a a the question and good where up of on great with a meet market industrially is in market down agriculturally, lot supply-driven becomes coming have more friends not eventually growth lot But of to when there, a we're you year. and I catches of them grows because Brazil market. about as market capacity both regularly.

you a we metric market. that As the of of are plus one we're $XXX, price is a minus reasons but priced active let's hasn't for recovered. urea in urea reasons. a work and world. to that freight, ton, a sulfate today, markets attractive matter been demand the and lowest say, as back are And points. today. And or The predominantly a one it's why staff Brazil fact, It's understanding of It's our it's patterns in integrate two and in there the active and

are UAN We products are in the market consistently there. grow and to trying shipping

us it see to sense. don't be a economic I makes participant unless market ramping necessarily to a So, up

And so in that or you'll attractive, us becomes when participate actively that greater changes see when degree. a

W. Anthony Will

about our new There's volatility. capacity ups picture that going rosy XXXX is be tried be much and an to pricing paint lot There's it. necessarily would XXXX could said be a like how to I marketplace. couple to traders, online affect get going They you that, that view We've a go overly XXXX. certainly real make North I capacity comment as that's of pretty there wrong, consistently of other don't crash, The it. going the that smarter to they're we've Prices absorbed don't in is downs about that is into think much than in else. And because comes the that America, much product appreciate importers what to everyone here. directly they too so know leads could bring

we're being their and of So, work there's to through kind system, there, trade until different be volatility some not out much and than uncertainty going the counting flows way those on XXXX XXXX.

Alexandre Falcao

Thank you.

Operator

you. Thank

Research Our of next question Partners. Vertical is Sandy Klugman from

is open. line Your

Sandy H. Klugman

very corn morning. Good gasoline moving to which you. estimates, SWOTs on for an X demand China, potentially its incremental have would billion CF? translate Does EXX obviously up my blend. bushels Thank it be of market company the By to any to could positive

Bert A. Frost

markets. the be last that exports sugar years as that seen couple you've place Sandy, Brazil and are of in Ethanol these supply the either when sugar we were for friends. taking gasoline. agree through make some There doing on that we or was prices in and ethanol with product committed were away to that are of more Brazil, rather than transition, to and like good incredibly And positive oxygenate markets a would are a we ethanol is exporting to build mix following ethanol high trying our CF. over for that I things we're down trying there, from great different how their

years I of is to take which domestic-produced EX or we're way produced our place. product think whether from long seeing a It's now. it's that again take imports, more So a couple a probably it's that corn yes, pulls domestically away right But positive. is go,

more so, come. And to

Operator

you. Thank

of John from Our next Roberts question UBS. is

line open. is Your

John Roberts

lows expect do really it's the you because low low, go cost volatility, that how to highs And is? below tell say curve, ask hard price on XXXX? I low you you similar continued the When think you. you Thank similar once to and primarily side,

W. Anthony Will

crystal mean, I this don't in have regard. I ball Yeah. a obviously we think, John,

slugs between and I have of and sold saw shut you lost year, these met, got material have in around, and think But those out can't well. floating as a per People the positions now pretty away the get for then the kind unwind they're people that you're what's because quick and and material which this to that from, back as excess the lows kind shoulder it sustain of pricing periods of down just you based attenders $XXX online, prices absorbed, more when new price you've trying applications tested comes get really levels gets big capacity in drives it's very the long. response, being is point of to North on global right Africa. that

coming So, downside we it do it on think volatility as happened there much whether as season. will the this overshoots be

is discipline. upon importers going depend and think whether find that some traders lot of I a to

Operator

all to is call Mr. this to time gentlemen, today. for have turn back we like Jarosick and Ladies you. remarks. closing would for the I for the Thank questions

Martin A. Jarosick

call everyone, February. us the to next We our with look speaking having for call. Thanks, you, forward we're joining and in on

Operator

Ladies and the in conference. you participation your gentlemen, This concludes thank today's for program.

great a day. may have You disconnect. Everyone, now

CF Industries (CF) 2 Nov 172017 Q3 Earnings call transcript